The author systematically examines one of the important issues of information — establishing the market price. He introduces the concept of «search» — where a buyer wanting to get a better price, is forced to question sellers. The article deals with various aspects of finding the necessary information.

Economics of Information

NUDGE: IMPROVING DECISIONS ABOUT HEALTH, WEALTH, AND HAPPINESS by Richard H. Thaler and Cass R. Sunstein Penguin Books, 2009, 312 pp, ISBN 978-0-14-311526-7This book is best described formally as a general explanation of and advocacy for libertarian paternalism, a term coined by the authors in earlier publications. Informally, it is about how leaders, systems, organizations, and governments can nudge people to do the things the nudgers want and need done for the betterment of the nudgees, or of society. It is paternalism in the sense that "it is legitimate for choice architects to try to influence people's behavior in order to make their lives longer, healthier, and better", (p. 5) It is libertarian in that "people should be free to do what they like - and to opt out of undesirable arrangements if they want to do so", (p. 5) The built-in possibility of opting out or making a different choice preserves freedom of choice even though people's behavior has been influenced by the nature of the presentation of the information or by the structure of the decisionmaking system. I had never heard of libertarian paternalism before reading this book, and I now find it fascinating.Written for a general audience, this book contains mostly social and behavioral science theory and models, but there is considerable discussion of structure and process that has roots in mathematical and quantitative modeling. One of the main applications of this social system is economic choice in investing, selecting and purchasing products and services, systems of taxes, banking (mortgages, borrowing, savings), and retirement systems. Other quantitative social choice systems discussed include environmental effects, health care plans, gambling, and organ donations. Softer issues that are also subject to a nudge-based approach are marriage, education, eating, drinking, smoking, influence, spread of information, and politics. There is something in this book for everyone.The basis for this libertarian paternalism concept is in the social theory called "science of choice", the study of the design and implementation of influence systems on various kinds of people. The terms Econs and Humans, are used to refer to people with either considerable or little rational decision-making talent, respectively. The various libertarian paternalism concepts and systems presented are tested and compared in light of these two types of people. Two foundational issues that this book has in common with another book, Network of Echoes: Imitation, Innovation and Invisible Leaders, that was also reviewed for this issue of the Journal are that 1 ) there are two modes of thinking (or components of the brain) - an automatic (intuitive) process and a reflective (rational) process and 2) the need for conformity and the desire for imitation are powerful forces in human behavior. …

Nudge: Improving Decisions about Health, Wealth, and Happiness

▪ Abstract We review empirical and conceptual developments over the past four years (1992–1995) on attitudes and persuasion. A voluminous amount of material was produced concerning attitude structure, attitude change, and the consequences of holding attitudes. In the structure area, particular attention is paid to work on attitude accessiblity, ambivalence, and the affective versus cognitive bases of attitudes. In persuasion, our review examines research that has focused on high effort cognitive processes (central route), low effort processes (peripheral route), and the multiple roles by which variables can have an impact on attitudes. Special emphasis is given to work on cognitive dissonance and other biases in message processing, and on the multiple processes by which mood influences evaluations. Work on the consequences of attitudes focuses on the impact of attitudes on behavior and social judgments.

Attitudes and attitude change

Consumer decision making has been a focal interest in consumer research, and consideration of current marketplace trends (e.g., technological change, an information explosion) indicates that this topic will continue to be critically important. We argue that consumer choice is inherently constructive. Due to limited processing capacity, consumers often do not have well-defined existing preferences, but construct them using a variety of strategies contingent on task demands. After describing constructive choice, consumer decision tasks, and decision strategies, we provide an integrative framework for understanding constructive choice, review evidence for constructive consumer choice in light of that framework, and identify knowledge gaps that suggest opportunities for additional research.

https://www.jstor.org/stable/pdf/10.1086/209535.pdf

Constructive Consumer Choice Processes

I describe a test of linear moderated mediation in path analysis based on an interval estimate of the parameter of a function linking the indirect effect to values of a moderator-a parameter that I call the index of moderated mediation. This test can be used for models that integrate moderation and mediation in which the relationship between the indirect effect and the moderator is estimated as linear, including many of the models described by Edwards and Lambert ( 2007 ) and Preacher, Rucker, and Hayes ( 2007 ) as well as extensions of these models to processes involving multiple mediators operating in parallel or in serial. Generalization of the method to latent variable models is straightforward. Three empirical examples describe the computation of the index and the test, and its implementation is illustrated using Mplus and the PROCESS macro for SPSS and SAS.

An Index and Test of Linear Moderated Mediation.

Recent research has identified two factors that influence consumer perceptions of a brand extension: brand affect and the similarity between the original and extension product categories. However, ...

The Importance of the Brand in Brand Extension

Grocery retailers have been informed that, to remain competitive, they must reduce the number of stockkeeping units (SKUs) offered, in line with consumer demand, or, in other words, adopt “Efficien...

Consumers’ Perceptions of the Assortment Offered in a Grocery Category: The Impact of Item Reduction:

Traditional explorations of inference making have examined consumers' reactions to product descriptions that lack information about salient attributes. Such studies frequently report systematically lower evaluations of incompletely described alternatives along with a generally low incidence of unprompted attribute-to-attribute inference. We argue that the nature and likelihood of an inference are dependent on the cues available at the time of decision making, and that some cues may exert a disproportionate influence on inference behavior. In several experiments in which subjects were presented with competing cues that implied different values of a missing attribute, we show that intuitive beliefs about the relationships between attributes are perceived as a particularly reliable basis for interattribute inference. Strong beliefs appear capable of superseding other compelling cues and may induce consumers to generate inferences spontaneously.

The Role of Consumers' Intuitions in Inference Making

A widespread practice in grocery store advertising is to compare the advertised store's prices to a competitor's prices on multiple items. An important, but largely unexplored, issue is how this information is processed and used in conjunction with prior beliefs to influence price perceptions. In our initial studies we manipulated prior beliefs and two data-based cues—frequency of price advantage and magnitude of price advantage—to determine their relative influence on consumer price perceptions. Results indicate that prior beliefs affected price perceptions but that the frequency cue exerted a dominating influence. Several follow-up studies demonstrate the robustness of this phenomenon across a variety of presentational and instructional conditions.

The Influence of Prior Beliefs, Frequency Cues, and Magnitude Cues on Consumers' Perceptions of Comparative Price Data

Four studies examine the process by which consumers integrate critic opinions and attribute information into their product evaluations and how critic consensus affects this process. A reference-dependent model is proposed such that consumer response to consensus depends on whether the average critic rating for an alternative is above or below an aspiration level. Consensus is shown to be preferred for alternatives above an aspiration level, whereas critic disagreement is preferred for alternatives below an aspiration level. Consumers exhibited a tendency to prefer critic disagreement for high-priced products or decisions associated with high social risk because most alternatives fell below their high aspiration levels.

https://www.jstor.org/stable/10.1086/209525

Susan M. Broniarczyk

Papers

The Importance of the Brand in Brand Extension

Consumers’ Perceptions of the Assortment Offered in a Grocery Category: The Impact of Item Reduction:

The Role of Consumers' Intuitions in Inference Making

The Influence of Prior Beliefs, Frequency Cues, and Magnitude Cues on Consumers' Perceptions of Comparative Price Data

Integrating Multiple Opinions: The Role of Aspiration Level on Consumer Response to Critic Consensus